27 January 2016

Hinkley

George Osborne’s gamble on a nuclear future for British energy looked increasingly risky last night as the company set to build the first new reactor for a generation postponed its “final investment decision”. EDF had been expected to announce the go-ahead for the £18 billion Hinkley Point project today but the French state-owned company pulled back amid growing financial problems. It is reported to be seeking extra support from the French government amid a collapse in energy prices and the value of its shares. Hinkley Point C, in Somerset, was to be the beginning of a new nuclear era in Britain with EDF building the plant and China providing financial support. EDF has seen its debts reach €37 billion (£28 billion) and share price fall from €29 in April 2014 to €11.87 this week. It is being forced to take over Areva, the company that developed the European pressurised reactor (EPR) technology, which is in question after a nine-year delay delivering a plant in Finland. Paul Dorfman, of the Energy Institute at University College London, said: “It looks like EDF is looking for an escape door.” He added that the EPR was flawed and that this could be the beginning of the end for French investment in Britain’s nuclear industry. Peter Atherton, an analyst at Jefferies, the US investment bank, said: “Financing such a massive project will place a significant strain on EDF’s finances.”

Les Echos said the French firm was struggling to find the cash for its 66.5% stake and was now “putting pressure on the [French] state, which owns 84.5% of EDF, to come up with fresh funds”. It said a final investment decision would now be made at the earliest at EDF’s annual results on 16 February. Greenpeace executive director John Sauven said: “The EDF board is clearly rattled as they delay yet again this crucial investment decision. It could well signal curtains for Hinkley. “EDF managers as well as employee representatives on the board are deeply concerned this project is too risky and too expensive.”

Two people with knowledge of the process told the Financial Times that the item had been taken off the agenda because of last-minute concerns expressed by some of the company’s most important backers. One said: “There are apparently some serious concerns among the private investors about how this will be financed.” Another person said the main item on the agenda would now be the company’s merger with Areva, the French nuclear energy group. The CFE-CGC union, which has a seat on EDF’s board, has posed a set of last-minute questions to the company about the financial risks. It has voiced concern that “significant” financial issues related to Hinkley could “put EDF in danger” in the long term. A CFE-CGC document highlighted the construction problems at both Flamanville and another similar plant in Finland, which is 10 years behind schedule and €5bn over budget. It asked: “What is the rationale for starting construction on two EPRs [European pressurised reactors], at the same site, in such a short period of time?”

Analysts at Bank of America Merrill Lynch said: “The key change with today’s report appears to be that a new financial partner could be a precondition to EDF’s ability to go ahead with the project. “We estimate a 66.5pc stake in the project implies an equity investment of c€5.5bn in today’s prices, suggesting c€1.3bn in external equity is needed to reduce EDF’s share to just over 50pc.” EDF had originally been expected to use project financing for Hinkley, backed up by up to £16bn in UK Government guarantees via Infrastructure UK. But Mr Lévy announced in October a “radical change” to what he said was a “more efficient” option of delivering its £12bn share of the project from EDF’s own balance sheet. It has since emerged the UK had attached a sub-investment grade BB+ credit rating to the project.

Just as EDF was due to make its ‘final investment decision’ on Hinkley C, writes Oliver Tickell, another delay. In spite of incredibly generous subsidies, the company is unable to finance it. Its last hope is to persuade the French state to take a 10% stake in the doomed project. The revelation comes in the French newspaper Les Echos, which has been consistently ahead of the pack with high-level leaks from EDF. According to its report, published today, the parastatal corporation has been unable to raise the full sum – some £18 billion – with which to progress the project. The revelation comes in the French newspaper Les Echos, which has been consistently ahead of the pack with high-level leaks from EDF. According to its report, published today, the parastatal corporation has been unable to raise the full sum – some £18 billion – with which to progress the project.

As if anything extra was needed to demonstrate the financial lunacy of the Hinkley C project to all parties concerned, EDF, according to French press reports, now wants the French Government to pay for it! Quite why anyone would want to take responsibility for a project whose potential lossmaking wildly exceeds even the over-generous offer made by the UK treasury and electricity consumers, beggars belief. Clearly EDF now do not want to. Under increasing pressure from company shareholders, unions, rating agencies, and others EDF has concluded that it just doesn’t have the cash to fund this disaster-in-waiting. Of course the subtext, is, as I have said for several years now, this project is unfinanceable in any rational way apart from being the receipt of a government blank cheque (if one accepts that as rational way!). Now, in effect EDF expects TWO governments to pay for it (UK and France)!

The EDF board is meeting tomorrow to reach its ‘final investment decision’ on Hinkley C. It was meant to be a rubber stamp but now it’s anything but, as EDF’s share price sinks to a new low, unions and employee directors harden their opposition to the project, and projects in France, Finland and China run way over time and cost with severe technical problems and safety concerns.

Plans by EDF to build a new nuclear power plant in the UK could be at risk after the firm was challenged by management unions to justify the decision ahead of a crucial board meeting this week. The meeting was intended to rubber-stamp a final investment decision on the project which has been subject to a litany of delays before construction has even started. However, reports in the French press suggest the moderate CFE-CGC union – which has seats on the management board – has challenged the scheme. In a letter to the board the union raised 15 questions about the project, suggesting it would be difficult to complete on time and that financing it could threaten EDF’s survival. When approached by the FT EDF made no comment. Sources close to the board suggest the concerns go beyond the unions meaning the firm may not have sufficient support to make a decision. The news comes amidst warnings from France’s technical regulator that there could be further problems with EDF’s Flamanville plant, which is built to the same design as that planned for the UK. Speaking to the French press, ASN chief Pierre-Frank Chevet warned the body was concerned by “anomalies” with the project which had not been spotted by EDF. The authority is conducting further tests on the crisis stricken plant which could cause further delays – with a decision expected later this year.

A trade union represented on EDF’s board has raised a set of last-minute doubts ahead of the company’s final decision on whether to build the Hinkley Point nuclear plant in Somerset. The CFE-CGC, a key manager-level union, last week drew up a list of 15 queries raising financial, legal and strategic concerns over whether EDF can afford the £18bn project. It also questioned whether EDF can deliver the project on time, given that similar projects are experiencing major delays.

As press reports suggest that EDF may take a final investment decision on the Hinkley Point C proposals on Wednesday this week, the Stop Hinkley Campaign has released a new briefing on the huge impact the Somerset reactors would have on the UK’s radioactive waste stockpile. The proposed Hinkley Point C nuclear power station would produce radioactive wastes and spent fuel with a radioactivity inventory equal to roughly 80% of the radioactivity in all of the UK’s existing radioactive wastes put together. As the UK Government eagerly awaits a final investment decision on possibly the most expensive infrastructure project in UK history, Ministers are misleading the public on how much nuclear waste it will create.

EDF

[Machine Translation] The French nuclear policeman sounds the alarm. Plant aging, difficulties of EDF and Areva, lack of means, the abnormality of the EPR, the high cost of Cigéo: as many reasons for concern. “The context for safety and radiation protection is particularly worrying. “Pierre-Franck Chevet, the president of the Nuclear Safety Authority (ASN), did not mince his words on the occasion of his vows to the press Wednesday, January 20. He gave an alarmist report on the state of nuclear power in France, in a speech of thirty minutes on three main grounds for concern. The first concerns what he called unprecedented challenges “, including the thorny issue of the extension of operating lives of reactors beyond 40 years. An extension which the gendarme of the French nuclear recalled that it was “not acquired” – “we are far from having decided the conditions” – but whose maturity is approaching, with a first-year inspection set at Tricastin I in 2019. While a review of the ASN on this possible extension is expected for 2018, the first “decision” – sort of prescription document setting out the broad guidelines – is announced for the coming weeks. On this subject, Pierre-Franck Chevet has also expressed a desire to “organize public participation,” “not required by law but necessary given the stakes.”

The French government will discuss the future of the country’s nuclear industry on Wednesday and might decide on the recapitalisation of reactor builder Areva, newspaper Le Monde reported on Tuesday. It said the boards of utility EDF and Areva, both state-owned at 85 and 87 percent respectively, would meet to discuss the planned takeover of Areva’s reactor arm by EDF. EDF has postponed making a final investment decision on its 18 billion pound project to build two nuclear reactors in Hinkley Point, Britain, it added.

Wylfa

Hitachi-GE Nuclear Energy, Ltd. on January 26 announced that the company held a suppliers forum at the British Embassy in Tokyo on January 25 for the “Horizon Wylfa Newydd Project,” the project will construct a new nuclear power plant on the Isle of Anglesey off the northwest coast of Wales in the UK.

Sellafield

A FORMER chief executive of the Nuclear Decommissioning Authority has been appointed as chairman of Sellafield Ltd. Tony Fountain, 55, succeeds Tony Price in the role on April 1, when the Nuclear Decommissioning Authority (NDA) takes over responsibility for day-to-day management of the nuclear site from the Nuclear Management Partners consortium. He was chief executive of the NDA from 2009 until 2011 and has 30 years of industry experience, having held key roles at BP and more recently at Reliance Industries’ refining and marketing business in India.

Moorside

Nuclear Industry Association

A FORMER Labour MP has been appointed chief executive of the trade body for the civil nuclear industry. Tom Greatrex, ex-MP for Rutherglen and Hamilton West, will take up the post at the Nuclear Industry Association next week, succeeding Keith Parker.

Radwaste – France

At least 1 worker killed in tunnel collapse at France’s planned nuclear waste storage site. A tunnel at a French nuclear waste storage facility under construction has collapsed, killing at least one person and injuring another, French media reported, citing rescue teams. The incident happened on Tuesday afternoon in Bure, northeastern France, at an underground laboratory of the National Agency for Radioactive Waste Management (Andra), which didn’t immediately comment on the incident. The two victims, including a seriously injured person, are still trapped 500 meters below the ground, with emergency services trying to reach them, Reuters reported, citing local fire service.

Energy Supplies

Retiring nuclear power stations and a planned coal phase-out could leave the UK facing a huge electricity supply gap by 2025, says the Institute of Mechanical Engineers. Does the UK face an electricity supply crisis? Carbon Brief explores the evidence. The IMechE analysis is simplistic and its conclusions are disputed. Its starting point is the UK’s planned coal phaseout by 2025. It also assumes that all of the UK’s nuclear power stations could close by 2025, despite the expectation that life extensions will keep them running longer. Rather than engaging in detailed energy and economic modelling of the likely consequences of these developments, the IMechE report relies on data from a single day last December. Carbon Brief approached energy analysts, industry representatives and government sources to gauge views on the IMechE analysis. Aurora has modelled the impacts of a UK coal phase-out, concluding that the power system could cope with closure by 2025, or even earlier, at minimal cost to consumers. The UK already has a significant pipeline of capacity from offshore wind, additional interconnectors to other parts of Europe and new nuclear power stations, Wronski points out. It also has a capacity market designed to guarantee sufficient supplies. While the scheme has its flaws — encouraging polluting small-scale diesel, for example — there is a general expectation that the UK’s tight electricity capacity margins will improve once the capacity market kicks in.

Amber Rudd last night rejected criticism from the CBI that billions of pounds in investment were being jeopardised by a failure to reach decisions. In a statement issued after a letter from the employers’ organisation called for “clear leadership and stable policy”, the energy secretary hit back at demands from investors for greater certainty to back construction of new power stations, wind farms and other energy projects. She insisted that the government was “taking long-term decisions to tackle a legacy of under-investment” in the UK energy industry and was pushing to “create the right environment for business to invest in clean, affordable and secure energy”. The statement came before Ms Rudd was due to meet Carolyn Fairbairn, the director-general of the CBI, today to discuss concerns that Britain faces a supply shortage after the closure of a s tring of nuclear and coal-fired plants. Eighteen business leaders, including executives from some of Britain’s top manufacturers, Tata Steel, Ineos and ScottishPower, also signed the letter, seen by The Times, which warned of an impending crunch because of a shortage of investment and uncertainty around future subsidies available for low-carbon power.

The UK Government’s policy to close all coal-fired power stations by 2025, combined with the retirement of the majority of the UK’s ageing nuclear fleet and growing electricity demand will leave the UK facing a 40-55% electricity supply gap, according to a new report by the Institution of Mechanical Engineers.

In response to a letter about energy policy in the Times newspaper on 26 January 2016, Energy and Climate Change Secretary Amber Rudd said: The top 10 things the government is doing to secure investment in clean secure energy include Committed to the first new nuclear plant for a generation at Hinkley Point C. It will power 6 million homes for 60 years and also provide 25,000 jobs giving the UK economy a huge boost; Boosting innovation funding to over £500m, including £250m for nuclear innovation and Small Modular Reactors.

India

French utility EDF said on Tuesday it had signed a memorandum of understanding with Nuclear Power Corp of India Ltd (NPCIL) for the construction of six EPR nuclear reactors at Jaitapur, in the west of India. With this agreement, EDF takes over the long-delayed project from French nuclear group Areva, which will sell its reactor arm to EDF later this year.

Weapons Convoys

Midlothian SNP MP Owen Thompson’s call to halt nuclear convoys through Scotland’s streets has received backing at Westminster. Mr Thompson has welcomed the decision in the House of Commons last week to give a second reading to his parliamentary Bill which would stop weapons of mass destruction being transported through the streets of Scotland.

Nuclear War

The Doomsday Clock, the symbolic countdown to humanity’s end, remained stuck on the brink of the apocalypse for a second year on Tuesday, because of the continued existential threats posed by nuclear war and climate change. The Bulletin of the Atomic Scientists, the group which created the clock in 1947, said it was keeping the clock hands set at three minutes to midnight – the closest the clock has come to destruction since the throes of the cold war in 1984.

Renewables

The Scottish Affairs Committee of MPs in the House of Commons has today announced an inquiry into the future of renewable energy in Scotland in the face of expected UK Government plans to reduce levels of taxpayer support for the sector. Much – if not most – of the UK’s renewable energy sector is based in Scotland and is an important part of the economy.

Renewables – floating turbines

Dounreay Trì Ltd. is seeking to demonstrate a multi-turbine floating wind farm located approximately 6 km off the coast of Dounreay, Scotland. Dounreay Trì was created by Swedish design and engineering company Hexicon AB for the sole purpose of demonstrating Hexicon’s semi-submersible foundation for offshore wind power. The project, planned for operations by summer 2018.

Renewables – offshore wind

The company planning a giant wind farm off the coast of Fife has said it will mean £1.1bn of spending in Scotland. Mainstream Renewable Power predicted 500 jobs should be involved in construction, and 100 employees during the 25 years it is in operation. A consortium of companies is being brought together to build the 450 megawatt wind farm, Neart na Gaoithe. It is due to be operating from 2020 if it wins a legal challenge now in Scottish courts. Mainstream Renewable Power said it was in exclusive discussions with InterGen, based in Edinburgh, Siemens Project Ventures, the Marguerite Fund and Infrared Capital. The involvement of Siemens points to the turbine blades being built at the German company’s factory in Hull, which is due to open in September.

District Heating

The government should create a level playing field for investment in district heating to boost development of the sector, the Association for Decentralised Energy (ADE) has told a group of MPs. In an evidence session to the Energy and Climate Change Select Committee today (January 26), the ADE’s director Dr Tim Rotheray welcomed the £300 million the government has put in place to develop district heat projects, but said the government needs to develop a “regulatory investment framework” during this parliament to support future growth. Rotheray said district heating needs a framework comparable to that which electricity and gas already have so “institutional investors” can compare options and evaluate them on a “level playing field”.

Demand Response

The US Supreme Court has just found that demand response (DR) is sold into wholesale markets, and therefore falls within the authority of the US Federal Electricity Regulatory Commission (FERC), which has authority over regional wholesale markets. In effect, this means that the multitude of demand response products and markets which have developed over the last 15 years or so, in various US States, are legal. The Electric Power Supply Association (EPSA) claimed that FERC did not have authority because demand response was related to retail markets. The Court of Columbia agreed with this. This verdict was then appealed and the process has gone the whole way up to the Supreme Court. The Supreme Court Opinion sets out the issues around DR at length.

Gov thinking seems to have finally caught up with reality - main question is not how best to make the taxpayer cough up for new nuclear. No justification for spending our money on outdated technology when renewables cheaper, quicker to build and cleaner.
https://t.co/PpeTfaBNpA

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